In view of the importance and complexity of this matter, on December 2017 the newsletter of the Labor Law Department of Belzuz Abogados S.L.P. - Sucursal em Portugal as approached the labor effects resulting from the transfers of undertakings. See article (portuguese version)
Approximately three months after the publication of such newsletter, Law No. 14/2018, of March 19 - in force since March 20, 2018 - has been published, amending the Labour Code and settling new rules on this matter.
To this extent, in this newsletter, the Labor Law Department of Belzuz Abogados S.L. Sucursal em Portugal will present the main amendments that have been introduced, which, in our opinion, will make the procedure inherent to the transfer of undertakings more complex and bureaucratic.
(1) EFECTS OF THE TRANSFER OF UNDERTAKINGS
It is now expressly established that employees maintain all the contractual and acquired rights, namely remuneration, seniority, professional category and functional content, and the social benefits acquired.
The period during which the transferor has responsibility (jointly with the acquirer) for the obligations due up to the date of the transfer of an establishment has been extended to two (2) years, expressly including all credits of the employee, arising from the employment contract, its execution, violation or termination, as well as all related social charges.
Large and medium-sized entities are now required, as a result of this amendment, to inform the Portuguese Authority for Working Conditions (“Autoridade para as Condições do Trabalho”) as regards the content of the contract entered into between the transferor and the acquire (irrespectively of its nature), and its essential elements, in the case of transmission of economic unit (if is the case).
Transmission may only take place within 7 (seven) working days after the expiry of one of the following events: (a) the deadline for nomination of the employee’s representative commission (if it has not been incorporated), or (b) after the agreement or the end of the negotiation and consultation stage of the employees' representatives.
(2) NEW ADMINISTARTIVE OFFENSES
The simulation of the transfer of an undertaking, as well as the non-recognition of the existence of a transfer of establishment (when it has taken place), constitutes a very serious misdemeanour, and the conviction for the offense of contravention (to be issued by the authority for working conditions) should indicate whether or not the transfer of the employer's position in the employment contracts has actually taken place.
(3) INFORMATION AND CONSULTATION PROCESS OF THE EMPLOYEES (OR ITS REPRESENTATIVES, IF APLICABLE)
New rules and obligations are introduced, leading - in our opinion - to a greater bureaucracy in the process of transferring an undertaking, especially the following:
(a) The transferor and the acquirer shall inform the employees' representatives (or the employees themselves in case of non existence of a employee’s commission) of the content of the contract executed between them, as well as the date and reasons for the transmission, its juridical, economic and social consequences for the employees and projected measures with labor impact;
(b) The Portuguese Authority for Working Conditions shall be entitled to participate in the negotiation between the employer and the employees' representatives, either within the transferring undertaking or within the acquiring undertaking, provided that any of the intervening parties requests it;
(c) In the absence of representatives of the employees covered by the transfer, they may constitute a representative commission with a maximum of three (3) or five (5) members, depending on whether the transfer involves up to five (5) or more employees, respectively;
(d) Trade union representatives are included in the concept of employee’s representatives, with the same priority / preference for intervention in respect of trade union commissions, trade union commissions and trade union delegates.
(4) THE RIGHT OF THE EMPLOYEE TO OPPOSE TO THE TRANSFER OF THE EMPLOYMENT CONTRACT
Law no. 14/2018 of March 19, expressly establishes the right of opposition of the employee to the transmission of his employment contract in the context of a transfer of an undertaking, and puts an end to a legal controversy, since Portuguese labor legislation didn’t contemplate (contrary to what is provided for in Council Directive 2001/23 / EC of 12 May 2001) this possibility. This is, in our view, one of the most important changes introduced by the above mentioned law.
This is a protectionist solution for the employee, allowing him to oppose to the transfer of his employment contract to the acquirer in case of transfer of and undertaking and, consequently, to maintain the employment contract with the original employer.
Notwithstanding, the exercise of this right of opposition is conditioned on the existence of "serious injury" for the employee, which can be verified, in particular, in the following cases:
(a) A manifest lack of solvency or a difficult financial situation of the acquirer; or
(b) If the acquirer's work organization policy does not give him confidence.
The exercise of this right of opposition of the Employee does not prevent the conclusion of the business of transmission, allowing only that the employee maintains the previous employment relationship with the transferor, instead of transferring it to the acquirer.
If the employee chooses to exercise his right of opposition, he must inform his employer, in writing, within 5 (five) working days of the expiry of the deadline for the appointment of the representative commission (if it has not been constituted), or after the agreement or the end of the consultation of the employee’s representatives, with an express reference to their identification, the activity contracted, and the grounds of the opposition.
In case of effective transfer of the employer's contractual position (for the acquirer), the employee has the possibility to terminate the employment contract with just cause, within 30 (thirty) days, being entitled to a compensation calculated according to article 366 of the Labor Code (that is, in the same terms established for collective dismissal procedures).
(5) APPLICATION OF THE COLLECTIVE BARGAINING AGREEMENT
According to the new rules, if after the minimum period of 12 (twelve) months, during which the collective bargaining agreement (“CBA”) that links the transferor is still in force, and the labor relations are not covered by a new CBA that binds the acquirer, the effects already produced in the employment contracts under the previous CBA that linked the transferor will be maintained, as regards: (i) remuneration, (ii) professional category and definition, (iii) duration of work, and (iv) social protection schemes that substitute those provided by the general social security system or with a protocol to replace the national health service.
The Labor Labor Law Department of Belzuz Abogados S.L.P. Sucursal em Portugal has a wide experience in advising companies on this subject, so it will be able to advise and clarify the recent changes mentioned above.
Belzuz Abogados SLP
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